Two well-known travel publishers and a hotel chain are currently part of investigations by UK economic regulator, the Office of Fair Trading (OFT), into alleged hotel booking price fixing.
The consultation period that has been launched means Booking.com, Expedia and InterContinental Hotels (IHG) must now respond to the Statement of Objections. It alleges the two travel publishers entered into an agreement with IHG, restricting how other online travel agents (OTAs) can discount room-only hotel accommodation.
Formal commitments have now been made by the three businesses that would relax existing restrictions, enabling OTAs to provide discounts on room-only rates. Funding of the discounts are likely to come through the use of commission revenue or margin.
Levelling the Playing Field
Whether the suggested commitments open the industry up to more competition is still open for debate according to Ann Pope, senior director in the OFT’s services, infrastructure and public markets group.
“The OFT is consulting on whether these commitments offer an immediate and effective means of injecting some meaningful price competition into the online offering of room only hotel accommodation bookings where, in our provisional view, none may exist.”
Investigations were deliberately restricted by the OFT to a small number of major companies. It believes these alleged practices are widespread and the result of the investigation could hold big implications for the industry.
Expedia released a statement of its own, reinforcing the publisher’s support of the commitments it contributed to: “Expedia welcomes these commitments which will enable the OFT to close its investigation without taking any action and to permit Expedia to focus on its long-standing commitment of driving global demand for its partners by providing the best online travel experience.”
Those wishing to comment on the commitments have until September 13 to submit their views to the OFT.